Virgin Australia profit misses estimates

Sydney: Virgin Australia Holdings Ltd, the country’s second-largest airline, posted net income that missed analyst estimates as rising costs curbed the benefits of increased sales to corporate customers.

Net income was A$23 million ($24 million, Dh88.2 million) in the 12 months ended June 30 after a loss of A$68 million a year earlier, the Brisbane-based carrier said in a statement on Tuesday. That missed the A$47 million average of 10 analyst estimates compiled by Bloomberg.

Operating costs increased 16 per cent to A$3.81 billion as the airline paid more for fuel, staff and airport charges and added more seats on domestic routes, paring the benefit from a 20 per cent rise in sales to A$3.91 billion. Passenger numbers grew 4.3 per cent as the company won business-class clients from Qantas Airways Ltd and entered tie-ups with carriers including Singapore Airlines Ltd and Etihad Airways PJSC.

“The cost base is going up and the challenge for Virgin is to ensure their revenues rise well in excess of their costs,” Russell Shaw, an analyst at Macquarie Group Ltd in Sydney, said by phone before the results.

The shares closed unchanged at 48 Australian cents, capping a 68 per cent climb this year, compared with a 7.5 per cent gain for the benchmark S&P/ASX 200 index and an 18 per cent slump for Qantas.